UAW Might Face Difficulties In Seeking Pattern Deals With Ford, Chrysler

Main Category: Health Insurance / Medical Insurance
Also Included In: Seniors / Aging
Article Date: 03 Oct 2007 - 7:00 PDT

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United Auto Workers negotiators representing Chrysler Group employees on Sunday refused to support the General Motors deal as a model for its new contract for several reasons, including the creation of a voluntary employees' beneficiary association, people familiar with the talks have said (Stoll/McCracken, Wall Street Journal, 10/2).

Under the VEBA, GM will transfer about $50 billion in retiree health care obligations to an independent trust fund to be managed by the union. Earlier this month, UAW selected GM, which has been the strongest proponent among the automakers of creating a VEBA, as its lead negotiation partner. The GM contract expired on Sept. 14 and was extended on an hourly basis during negotiations. Contracts with Ford Motor and Chrysler were extended indefinitely while negotiations between UAW and GM were under way. Local UAW officials now are presenting the contract to the union's 73,000 GM rank-and-file members, and they have until Oct. 10 to vote on ratification (Kaiser Daily Health Policy Report, 10/1).

These are signs that UAW President Ron Gettelfinger could face a "difficult balancing act" in achieving pattern bargaining -- under which Ford and Chrysler would accept the terms of the GM contract -- "given the various states of restructuring among Detroit's automakers," the Wall Street Journal reports (Wall Street Journal, 10/2). Gettelfinger said negotiations might resume at Ford and Chrysler on Monday, but UAW has met with neither yet. Executives at both companies continue to review the tentative deal between UAW and GM (Hoffman, Detroit News, 10/2).

Ford, Chrysler Concerns
UAW representatives on the Chrysler team are reluctant to accept a VEBA, the Journal reports. They also have concerns about a measure that would reduce wages and benefits for newly hired workers. In addition, Chrysler's management is "taking issue with the terms of the VEBA" at GM, including a provision that retiree liabilities will not be transferred until 2010, according to the Journal. Chrysler recently was taken private by Cerberus Capital Management.

Meanwhile, Ford's management is questioning a provision that uses GM's overfunded pension plan to help offset out-of-pocket health care costs for retirees under the VEBA deal. Ford's pension plan is underfunded by about $560 million -- compared with a $17 billion surplus at GM -- meaning that an increase in pension payouts might not be feasible for Ford (Wall Street Journal, 10/2). According to the Detroit Free Press, a pattern deal would have different impacts on Ford and Chrysler because GM has an "older work force and more retirees, making health care a bigger issue" (Collier/Gopwani, Detroit Free Press, 10/2).

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